Slide 1: Half year results presentation
Half year results presentation 15 November 2016
Slide 2: Operational highlights
2 Operational highlights Fundraising and capital deployment on track Total AUM up 2% to €22.0bn, with €1.4bn of new money raised; third party fee earning AUM up 5% to €16.5bn Fundraising performance in line with expectations, driven by our real estate fund, ICG Longbow Fund IV, reaching its maximum
Slide 3: Financial highlights
3 Financial highlights Strong financial performance driven by capital gains Group profit before tax1 was £133.0m (H1 2016: £88.1m), due to a strong period of capital gains of £125.5m (H1 2016 : £62.5m). Fund Management Company profits up 17% to £34.0m (H1 2016: £29.0m), with third party fee income u
Slide 4: Brexit and ICG
4 Brexit and ICG Predictable secured fee income and opportunities remain • Sustained demand for high yielding alternative asset classes Fundraising • Demand for European assets continues to grow • Domestic appetite for UK assets stronger than ever • UK M&A market slows down in the short term Investm
Slide 5: Strategic priorities
5 Strategic priorities FY10 - FY15 FY16 - FY19 Building the platform Profit maturity By FY20 Manage pre global financial crisis Deliver gross fundraising target Recognised as a diversified portfolio asset manager Enhance brand and client base Develop a scalable infrastructure Increased fundraising t
Slide 6: Financial Review
Financial Review iCG
Slide 7: Financial highlights
7 Financial highlights Fund Management profits continue to grow 6 months to 12 months to 6 months to £m 30 September 2016 31 March 2016 30 September 2015 Fund Third party fee income 62.9 108.9 49.9 Management IC management fee 9.2 18.4 9.1 Company Other income 11.4 18.9 9.1 Operating costs (49.5) (8
Slide 8: Balance sheet and capital strategy
8 Balance sheet and capital strategy Balance sheet efficiency achieved 30 September 2016 31 March 2016 31 March 2015 £m Assets Loans and investments 1,873 1,798 1,691 Assets for syndication 150 183 244 Cash 326 113 277 Other 199 236 123 Total assets 2,548 2,330 2,335 Liabilities Borrowings 1,084 866
Slide 9: Cash flow
9 Cash flow Operating cash inflows higher due to realisations 6 months to 12 months to 6 months to £m 30 September 2016 31 March 2016 30 September 2015 Cash in from realisations and recoveries 302.9 394.3 166.4 Cash paid to purchase loans and investments (178.2) (247.1) (153.9) Cash movement in asse
Slide 10: Fund Management Company
Fund Management Company iCG
Slide 11: Third party assets under management
11 Third party assets under management Record level of third party AUM at €19.8bn AUM H1 inflows/outflows by strategy Third party AUM up 3% and fee earning AUM increased by 5% since FY16 €bn 1.0 Total net increase €0.5bn; inflows €1.4bn; outflows 0.8 €0.5bn and €0.4bn FX and other 0.6 Realisations i
Slide 12: Management fee income
12 Management fee income Management fee income increasing across all asset classes Third party management fee income £m 35.0 Thousands 30.0 25.0 16.3 16.9 20.0 16.1 15.0 10.0 15.6 14.1 5.0 10.6 11.2 10.5 8.3 9.3 9.5 7.9 2.9 0.9 0.5 0.7 1.9 0.0 H1 16 H2 16 H1 17 H1 16 H2 16 H1 17 H1 16 H2 16 H1 17 H1
Slide 13: Weighted average fee rate
13 Fee income Weighted average fee¹ rates resilient at 0.88% 1.00% Fee rates have remained broadly flat over the last four years 0.95% Weighted average fee rate 0.91% Changes in weighted average fee 0.90% 0.88% 0.88% rate driven by mix of strategies 0.86% 0.85% Strategies charging fees on invested c
Slide 14: FMC operating margin
14 FMC operating margin Operating margin maintained above 40% target £m Operating m argin 160 50% 45% 140 40% 120 Target 35% 100 30% 80 25% 20% 60 15% 40 10% 20 5% 0 0% FY13 FY14 FY15 FY16 H1 16 H1 17 Costs (lhs) Income (lhs) Operating margin (rhs)
Slide 15: FMC operating costs
15 FMC operating costs Investment in new strategies increases costs 6 months to 6 months to 6 months to 12 months to £m 30 September 2016 31 March 2016 30 September 2015 31 March 2016 Investment team salaries 12.6 10.6 9.1 19.7 Marketing salaries 2.5 2.1 1.9 4.0 Infrastructure salaries 4.0 3.5 3.2 6
Slide 16: Investment Company
Investment Company iCG 16
Slide 17: Return on assets
17 Return on assets Loan book heavily weighted to higher returning assets Average loan book and ROA by product type Average ROA is 18%, up from 13% in FY16, due to the strong level of capital gains in the £m ROA current period 1,400 25.0% Majority of investment book in the Corporate 1,200 Investment
Slide 18: Capital gains
18 Capital gains Unrealised capital gains remain in line with recent trend Composition of capital gains by type Post 2011 equity assets are fair valued through the P&L. Unrealised gains averaging 8-10% of the £m opening non-interest bearing equity book 140.0 Unrealised capital gains in current perio
Slide 19: Investment Company costs
19 Investment Company costs Investment in business development increases cost base 6 months to 6 months to 6 months to 12 months to £m 30 September 2016 31 March 2016 30 September 2015 31 March 2016 Salaries 5.6 4.8 4.0 8.8 Cash incentives 10.1 11.9 10.0 21.9 Deferred aw ards 12.8 8.7 9.1 17.8 Incen
Slide 20: FY17 guidance – no change
20 FY17 guidance – no change Fundraising – average €4bn over fundraising cycle. FY17 likely to be lower FMC operating margin – over 40% Performance fees to average £15-20m per annum Net impairments – less than long term average of 2.5% of opening book Balance sheet portfolio – average c£2bn with co-
Slide 21: Operating Review
Operating Review iCG
Slide 22: ICG operating model
22 ICG operating model INVESTING FUNDRAISING • Fund deployment • Gross fundraising to average • Fund performance and track €4bn per annum record • Maintain fee level • Impairment target of less • Selective product expansion than 2.5% of opening book Investment in new funds IC PROFITABILITY FMC PROFI
Slide 23: Fundraising
Fundraising iCG 23
Slide 24: Fundraising market
24 Fundraising market ICG product offering shows strong growth potential Institutional investors' plans for allocations in the longer term 80% 60% Increase in allocation 40% 67% 56% 50% 20% 35% 24% 17% 0% Decrease in allocation (7%) (8%) (17%) (14%) (20%) (33%) -20% -40% Private debt Private equity
Slide 25: Fundraising momentum
25 Fundraising momentum Fundraising focus currently on smaller and newer strategies €bn Funds raised in H1 17 by strategy (€m) 7 12 Asia Pacific Mezzanine 6 345 Real Estate Funds 5 Fundraising expectations European CLOs c€4bn pa 390 4 6.4 Senior Debt Partners 3 125 5.2 31 Credit funds 2 3.8 162 1 2.
Slide 26: Fundraising case study – ICG Longbow
26 Fundraising case study – ICG Longbow ICG Longbow Fund IV closes at its maximum size Fundraising history Fund IV investor base re-ups Cross-selling £m from other ICG Funds, 10% 1000 New 945 55% 900 800 Existing 35% 700 650 600 500 Fund IV investor base by geography and type 400 Other 12% 300 Austr
Slide 27: Fundraising outlook
27 Fundraising outlook H2 fundraising focus shifts to Secondaries and credit funds H2 17 FY18 FY 19 Australian Loan Fund US Private Debt Fund II Corporate strategies Senior Debt Partners III US Direct Lending CLOs Capital Market Loan & Opportunity funds strategies Mandates UK RE Mezzanine Fund V Rea
Slide 28: Business development
Business development iCG 28
Slide 29: Developing new strategies
29 Developing new strategies Fundraising across an expanded range of strategies Mature investment strategy Europe CLOs Europe Mezzanine ICG Enterprise Trust Real Estate Mezzanine Europe Senior Debt Asia Pacific Mezzanine North America Mezzanine Real Estate Development Loans US CLOs Total Credit Alte
Slide 30: Developing new strategies
30 Developing new strategies Growth from adding complementary strategies Corporate Capital Market Real Asset Secondary investments investments investments investments Existing strategies Existing strategies Existing strategies Existing strategies Europe Mezzanine Europe CLOs UK Real Estate (RE) Stra
Slide 31: Developing new strategies: Strategic Secondaries
31 Developing new strategies: Strategic Secondaries Strong market dynamics and investment opportunities Strong Significant target universe of investment opportunities and increasing deal flow Market Relatively limited competition to lead fund restructuring transactions Dynamics Buying portfolios of
Slide 32: Investing
Investing iCG 32
Slide 33: Investment markets
33 Investment markets Differentiation in approach and strong origination model Corporate Capital markets Real asset Secondary investments investments investments investments Buyout markets are up on last Leverage loan and high yield Significant competition for Strong opportunity to year, despite rec
Slide 34: Investing our direct investment funds
34 Investing our direct investment funds Capital deployment on track in a competitive market Direct investment funds Fund invested at 30 £m September 2016¹ 3,000 100% 2,606 2,433 46 90% 2,500 87 80% 781 2,000 70% 915 1,581 ICG Longbow IV 60% 1 1,500 North America 1,315 483 50% 87 1,025 226 SDP II 1,
Slide 35: Managing Investments
Managing Investments iCG 35
Slide 36: Fund performance
36 Fund performance Funds consistently performing above target Target Realised Fund IRR on realised assets MM MM ICG Mezzanine Fund I 1998 (fully realised at 1 April 2015) n/a 1.5x ICG Mezzanine Fund II 2000 (fully realised at 1 April 2015) n/a 1.7x ICG Europe Fund IV 2006 (fully realised at 24 Marc
Slide 37: Portfolio performance
37 Portfolio performance Impairments at historic average; portfolio performance robust Percentage of portfolio performing above prior year Net impairments as a percentage of opening book 5% 80% 70% 4% 60% 50% 3% Historic average 40% 2% 30% 20% 1% 10% 0% 0% Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep
Slide 38: Capital Allocation & Wrap Up
38 Capital Allocation & Wrap Up
Slide 39: Capital allocation
39 Capital allocation Balancing business growth and shareholder returns INVESTING FUNDRAISING • Fund deployment • Gross fundraising to • Fund performance and average €4bn per annum track record • Maintain fee level • Impairment target of less • Selective product than 2.5% of opening book expansion I
Slide 40: Strategic priorities
40 Strategic priorities FY10 - FY15 FY16 - FY19 Building the platform Profit maturity By FY20 Manage pre global financial crisis Deliver gross fundraising Recognised as a diversified portfolio target asset manager Develop a scalable infrastructure Enhance brand and client Increased fundraising targe
Slide 41: Q&A
Q&A iCG
Slide 42: Disclaimer
42 Disclaimer THE MATERIALS BEING PROVIDED TO YOU ARE INTENDED ONLY FOR INFORMATIONAL PURPOSES AND CONVENIENT REFERENCE AND MAY NOT BE RELIED UPON FOR ANY PURPOSE. THIS INFORMATION IS NOT INTENDED TO PROVIDE, AND SHOULD NOT BE RELIED UPON, FOR ACCOUNTING, LEGAL, TAX ADVICE OR INVESTMENT RECOMMENDATI